CSR activities in FY2021

Stakeholder Dialog

8th

7th

Date

July 2021

Participants

Experts

Katsuhiko Kokubu

Professor, Kobe University Graduate School of Business Administration

Masaru Kaizaki

General Manager in charge of Sustainability Office, OMRON Corporation

Hideki Matsuoka

Special Project Manager, Asia-Pacific Human Rights Information Center

Eriko Nashioka (Facilitator)

Representative Director of Institute for Environmental Management Accounting, CPA

NTN

Toshinori Shiratori

Managing Executive Officer in charge of Human Resources, CSR, Information Technology, General Affairs, and EHS(Environment, Health & Safety) Integrated Management

Masaaki Yamamoto

Executive Officer and Corporate General Manager of Corporate Strategy Headquarters

Kenji Nono

Operating Officer and Corporate General Manager of Human Resources Headquarters and in charge of General Affairs/EHS (Environment, Health & Safety) Integrated Management

Shumpei Kinoshita

Deputy Corporate General Manager of Corporate Strategy Headquarters and Manager of Corporate Planning Department

Youichirou Mochida

Manager of Corporate Communications Department, Corporate Strategy Headquarters

Masayuki Yamazaki

Manager of EHS (Environment, Health & Safety) Integrated Management Department

Toshiyuki Kawaguchi

Deputy Corporate General Manager of Human Resources Headquarters and Manager of Personnel Department

Ryuma Mano

Manager of Procurement/Logistics Department, Global Procurement Headquarters

Masaaki Masumoto

Corporate General Manager of CSR Headquarters

Kouhei Iguchi

Manager of Corporate Value Promotion Department, CSR Headquarters

Topic 1 Evaluation of sustainability activities over the past year and proposals

NTN

The Sustainability Committee, which was established 2 years ago, took the lead in establishing the Human Rights Policy and identifying materiality in the previous fiscal year. In May of this year, following the resolution by the Board of Directors, the Company also expressed our support of TCFD recommendations. First of all, could you please give us an evaluation of our efforts over the past year?

Experts

It can be said that NTN's sustainability activities are advanced with consideration given to its industry type and the size of the Company. I think you have the same level of strategic planning as other top companies in terms of support of TCFD recommendations and materiality identified.
However, if practice diverges from philosophy, the philosophy is meaningless. Going forward, it will be important to successfully link strategies and initiatives.

Experts

Over the past year, I had the impression that the story has been successfully formed with factors such as the corporate philosophy, the value creation process, materiality, and NTN's strengths. How do you link this to your business? In addition, if you are able to complete the story by achieving a resultant increase in corporate value, I think it will be even better.

Experts

A framework for human rights initiatives is also being formulated. What I always tell companies is that it's hard to create a framework, but it gets even harder after it's created. Efforts to disseminate the system within the Company and ensure that each individual understands it will become important in the future.

Topic 2 Setting of materiality targets and integration into management

NTN

Last year, the Company identified 13 items of materiality for responding to SDGs. Currently, we are setting targets for identified materiality and KPIs and drafting specific measures. Regarding the setting of targets and KPIs, we are advancing discussions, including whether quantitative targets are necessary or whether qualitative targets are acceptable depending on the items. We are also seeking ways in which each employee will regard targets for the identified materiality "as his/her own targets."

Experts

Many companies may misunderstand materiality. They consider materiality as "important for them." Materiality originally refers to how a company has an impact on important social issues, and does not constitute strategic importance for the company. In that respect, NTN probably identified materiality without any misunderstanding. However, it is still unclear what specific involvement the Company will have. Sustainability activities involve solving social issues using the 6 types of capital a company possesses. Important is a vision in which, even if a company does not gain profit in the short term, society will gain benefits from a long-term perspective.
Regarding the setting of targets, if you are seriously addressing social issues as a company, qualitative targets are also acceptable. However, from a strategic perspective, qualitative information does not convey the actual status of activities. Quantitative information may also be useful to show that your efforts are not just words on paper. In addition, setting quantitative targets makes it easier for employees to tackle issues and make it easier to understand the direction of activities.

Experts

I think it is important to set materiality targets and KPIs based on the time horizon with attention paid to "by when." However, people will never focus only on quantitative targets. If the Company provides a story of what value will be created, even if it is qualitative, the story will impress stakeholders. Conversely, even quantitative information would not make sense if a story that impresses stakeholders could not be presented. For example, regarding diversity, it is important to consider what the Company wants to be like as a result of setting KPIs for the number of women in managerial positions.
In addition, in order to disseminate materiality throughout the Company, it would be better to link the corporate philosophy with materiality. By showing the path that the implementation of the corporate philosophy is linked to materiality targets, I believe that each and every employee can regard materiality targets "as his/her own targets."

NTN

We would like to review materiality once a year with the participation of management. However, human rights issues and the like cannot be addressed by the Company alone. The reality is that we are thinking about how far we should go while taking measures.

Experts

With regard to human rights, it is difficult in reality to look at all aspects of the supply chain, and it is also necessary to narrow down to important suppliers or otherwise set a certain range. For example, not only employees of the Company but also employees from temporary staff companies and subcontractors working at the Company's business sites can be set as targets. I think that a scope can be set on the importance of human rights issues by expressing that human rights issues occurring within the Company's business sites need to be proactively addressed by the Company.

Experts

Regarding human rights issues, although it is a prerequisite to identify human rights issues across all operations, we cannot watch all operations. The "Guiding Principles on Business and Human Rights" also state that companies should prioritize their efforts.

Topic 3 Human rights due diligence

NTN

We established the "Management Policy" in December 2019. The policy states that we conduct business by placing an emphasis on respect for human rights. The "Management Policy" is the backbone of all our policies. In other words, this means we respect human rights in all of our activities, including those of our domestic and overseas group companies.
Subsequently, in July last year, we established the "Human Rights Policy" and announced that we will work to establish a mechanism for human rights due diligence not only within the Company, but also across the entire supply chain. We have also identified "Respect for human rights" as one of our materiality issues. In April of this year, we redefined our "Procurement Policy" under the Management Policy. We are currently revising our "CSR Procurement Guidelines" and asking our suppliers to address human rights issues.
We have finally begun full-fledged efforts, but we would like to hear your recommendations on how to proceed with human rights due diligence and on the promotion of CSR by business partners.

Experts

I think it is effective to link this with your corporate philosophy in order to instill your activities for respecting human rights into overseas regions. In conjunction with activities to disseminate NTN's corporate philosophy at home and abroad, what about taking measures so that the efforts to respect human rights will take root throughout the entire NTN Group? The point to note is that even if international human rights standards are common, perceptions of human rights may differ depending on the country, region, religion, etc. Taking a look at NTN's CSR questionnaire surveys, how respondents interpret concepts may differ depending on the country and region. I think you should proceed while being conscious of the necessity of responding on a case-by-case basis.

Experts

To ensure that awareness of human rights permeates the entire Company, employees need to be encouraged to understand the significance of human rights initiatives, risks associated with human rights issues, and the advantage that a company working on such issues can be chosen by customers. With regard to penetration beyond the company, it is important to understand that human rights issues are connected within the entire supply chain. Both NTN and the Company may audit business partners, but on the other hand, NTN and the Company are also suppliers and parties to be audited from the viewpoint of another company. In this way, I believe it is important to be aware that human rights-related issues are connected in operations from upstream to downstream throughout the supply chain.

Experts

It is very difficult for the Company alone to check subcontractors and sub-subcontractors of its primary suppliers. Procurement standards of many companies seem to require the suppliers of a company surveyed (secondary suppliers for the surveyor company) to be verified. In a chain reaction, third and fourth suppliers will be surveyed, but up to end suppliers cannot be investigated after all. In the case of SMEs, the definition of words may not be correctly understood, so it may be necessary to explain carefully or to divide and simplify the content of the questionnaire according to the size of a company.

Topic 4 Initiatives based on TCFD recommendations

NTN

We have expressed our support of TCFD recommendations in May of this year. Currently, a cross-departmental team consisting of the Sustainability Committee and the heads of related divisions is in the process of conducting scenario analysis. Please advise us on how to proceed in the future.

Experts

Many Japanese companies express their support of TCFD recommendations, and the revised Corporate Governance Code now requires climate change disclosures based on TCFD or its equivalent international framework. TCFD recommendations originally called on financial institutions to disclose the financial impacts of climate-related risks and opportunities. Of course, even in the case of operating companies, those that generate a large amount of CO₂ also need to disclose information based on TCFD recommendations. However, for a company like NTN whose CO₂ emissions are not so significant in society as a whole, I think it would be better to consider qualitatively showing both the risks and opportunities related to climate change without focusing on disclosing quantitative targets.

Experts

OMRON expressed its support of TCFD recommendations in February 2019. Accordingly, we continue to discuss what business risks and opportunities exist in accordance with the framework of the recommendations. Last year, the Energy Solutions Headquarters conducted scenario analysis of risks and opportunities. In addition to reflecting the results in its business plan, the company included them as TCFD initiatives in last year's integrated report and this year's securities report. The company plans to disclose information from the perspective of what risks and opportunities it has in other businesses, but the company is proceeding cautiously without focusing on quantitative information.

Experts

As with TCFD recommendations, in the past year or two, the importance of disclosing ESG-related information has significantly grown in society. On the other hand, it is also a matter of concern that various guidelines may require more than what is really necessary. Many companies probably think that they should do something even bigger than what they should do in the first place. Rather than trying to follow developments in countries around the world on a superficial basis, what is important is keeping an eye on each of these trends, and to proceed with steady initiatives that can be put into practice in-house. ESGs should not be words on paper. I would like to look forward to seeing initiatives produce actual results.

NTN

We received an evaluation of our efforts over the past year. We have indicated the path that we should take going forward, and based on the content of the recommendations we received, we intend to continue our activities by disseminating such philosophy and systems throughout the Company, including Group companies. Thank you very much.

6th

Date

July 2020

Participants

Experts

Katsuhiko Kokubu

Vice President of Kobe University

Masaru Kaizaki

General Manager of Planning Department, Sustainability Office OMRON Corporation

Hideki Matsuoka

Special Project Manager, Asia-Pacific Human Rights Information Center(HURIGHTS OSAKA)

Eriko Nashioka
(Facilitator)

Representative Director of Institute for Environmental Management Accounting, CPA

NTN

Toshinori Shiratori

Managing Executive Officer in charge of Human Resources, CSR, Information Technology, General Affairs, and EHS(Environment, Health & Safety) Integrated Management

Masaaki Yamamoto

Executive Officer and Corporate General Manager of Corporate Strategy Headquarters

Kenji Nono

Operating Officer in charge of Human Resources, General Affairs and EHS (Environment, Health & Safety) Integrated Management

Takanobu Ozawa

Deputy Corporate General Manager of Corporate Strategy Headquarters and Manager of Corporate Planning Department

Youichirou Mochida

Manager of Corporate Communications Department, Corporate Strategy Headquarters

Masayuki Yamazaki

Manager of EHS (Environment, Health & Safety) Integrated Management Department

Toshiyuki Kawaguchi

Manager of Personnel Department

Masaaki Masumoto

Corporate General Manager of CSR Headquarters

Kouhei Iguchi

Manager of Corporate Value Promotion Department, CSR Headquarters

Topic 1 Sustainability Promotion Activities

NTN

Through our business activities, we contribute to the resolution of social issues and aim to achieve a sustainable NAMERAKA Society. The biggest initiative in the fiscal year under review was a change in the management regulations for sustainability promotion activities. In 2006, we established rules for managing CSR activities, but at that time the policy related to "Responsibility" had a relative emphasis on compliance. While strengthening compliance, we have reframed the significance of "Responsibility" based on the idea that we want to be a company that meets the expectations of society, as stated in our value creation process. We have changed the term from "CSR" to "Sustainability", established the "Sustainability Committee" last year, and have started activities.
At this Sustainability Committee, "identification of our materiality" is one of the issues to be discussed. Currently, we have set up working teams centered on young employees and mid-career employees, referring to GRI standards and megatrends, identifying and evaluating issues, and working to narrow down our materiality. We would like to be able to announce it in the next fiscal year.

Experts

Identifying materiality is important, but every company seems to find it extremely difficult to put it into practice. This is because all items are important. If everything is important, it becomes meaningless to identify materiality. Currently, NTN has set a large theme that is applicable to any company, so why not focus on more detailed items for discussion? When most Japanese companies plot their issues on a matrix, they use the 2 axes of "importance to society" and "relevance to business." However, GRI essentially wants companies to pay attention to not "relevance to business" but "impact on stakeholders' decision-making." I think it would be good to verify such aspect again.

Experts

OMRON also identifies its materiality. However, human resources management and risk management are regarded as a matter of course, and there is an increase in cases where companies are not evaluated favorably even if they conduct such management activities. We are making improvements to express the uniqueness of OMRON more strongly. I think it would be better for NTN to consider expressing the "uniqueness of NTN" in the same way. What is more important is the period subject to materiality issues and the management system. I think it is necessary to consider how and how long materiality issues are managed in the business management process and how external evaluations are incorporated into the Company's activities.

NTN

We would also like to ask about activities to instill our corporate philosophy. With the 100th anniversary celebrated in 2018, the corporate philosophy system was revised to establish NTN SPIRIT, which serves as the basis for employees'activities, and initiatives to put the corporate philosophy into practice were launched. We are promoting activities to disseminate our corporate philosophy through the 3 steps of "Recognition," "Empathy & Understanding," and "Practice." In 2019, we held the second NTN PROUD AWARD, which is an initiative to "Practice" our corporate philosophy. The number of employees who support these activities is increasing, and we intend to continue to firmly establish them on a global scale in the future. At the same time, we believe that there are issues regarding the positioning of the NTN PROUD AWARD in the corporate award system, how to reflect the practice of our corporate philosophy in our business goals and personnel assessment, and how to promote our corporate philosophy amid the coronavirus pandemic.

Experts

OMRON has also held TOGA(The OMRON Global Awards) since 2012 to support the practice of the company philosophy. The only team-based internal award system we have is TOGA. When an employee wins the award, it is recorded in the employee's personnel evaluation sheet. However, it is extremely difficult to reflect the practice of our corporate philosophy in personnel evaluation, and we are currently looking for ways to link the system to evaluation practices.
Regarding corporate philosophy activities amid the coronavirus pandemic, we first place emphasis on the health and safety of our employees, while at the same time fulfilling our supply responsibilities as a manufacturer and contributing to society through our business activities. Our employees participated in ventilator development in Spain, but this was not a top-level order, but a voluntary action. I think this is a good example of how our corporate philosophy has been disseminated and put into practice.

Experts

In recent years, our corporate philosophy has become an extremely important part of our CSR activities. NTN's founders'"Frontier Spirit" and "Coexistence and co-prosperity Spirit" have a significant impact. The "Frontier" recalls "Innovation" and "Co-existence and co-prosperity" recalls "Creating Shared Value," bringing home the fact that NTN really wants to resolve social issues.

Topic 2 Human Rights

NTN

This year we formulated the Human Rights Policy. We signed the United Nations Global Compact in 2015 and changed our institutional designs to a Company with a Nominating Committee, etc. last year. These measures further clarified our Management Policy, and because "Respect for human rights" was included in the policy, we decided to formulate the Human Rights Policy. In the future, we will examine the method of operating this Human Rights Policy, the scope of applicable suppliers and the method of managing them.

Experts

I feel that a mechanism for human rights due diligence is very difficult to operate, even though it is possible to create a mechanism or report to outside parties that a mechanism has been created. The main point of internal dissemination is that each and every employee understands human rights in a way that links them to their work. Human rights risks are also linked to management risks. It is necessary not only to create a system but also to continue education in everyday life.
With regard to the scope (boundary) of suppliers, it seems that many companies actually ask Tier 1 suppliers to investigate things.

Experts

The scope of application of the Human Rights Policy is also important. In the case of OMRON, a survey revealed that regular employees of OMRON accounted for less than the majority of all employees at some business sites. Based on these examples, we believe that we should not apply the policy only to employees who are directly employed by OMRON, but should also apply to temporary staff employees and contractors'employees who work at the sites.
As for the boundary, we are implementing measures by including surveys targeting Tier 2 and subsequent-tier suppliers in Tier 1 requirements.

Topic 3 Environment

NTN

In the fiscal year ended March 2020, production was reduced due to the coronavirus pandemic, resulting in a decrease in CO₂ emissions, but unit CO₂ emissions were increased. In Stakeholder Dialog last year, it was pointed out that we should indicate a change (what volume of CO₂emissions are reduced compared with the time when products before the reduction were used), rather than indicating a reduction of CO₂ emissions. Therefore, since last year we have been quantifying environment-contributing products and consider setting the goal of eliminating CO₂ emissions in the long run. Specifically, the total volume of CO₂ generated (consumed) when products are used and CO₂ generated by NTN's business activities is offset by CO₂ reduced as a result of power generation with natural energy products, and this is an image of achieving the goal. Do you regard this as "net zero CO₂emissions"?

Experts

It is better to say that "net zero CO₂ emissions" refers to maintaining a balance between human-induced CO₂ "emissions" and human-induced "absorption," such as through the promotion of tree planting. In this sense, it may be better to move away from the concept of "net zero." As the bearings industry has a fixed range of product types, we believe it will be difficult to switch to businesses that emit less CO₂ and drastically reduce CO₂ emissions. In addition, because of the concepts of SDGs and the circular economy, society as a whole is progressing toward a low-carbon society, with the automotive industry itself being targeted. Even if it is difficult for the bearings industry to do something drastic, I think it is important to consider the issue of climate change from the perspective of what "our company" can do for society.

Topic 4 How to Promote Business Activities in the coronavirus pandemic

NTN

We have identified the year ending March 2021 as "Crisis Response Period" and listed "Ensure the health and safety of employees" and "Prepare for future growth" as the major themes. Specifically, we intend to promote telework and respond to SDGs. Following the Declaration of State of Emergency, we have also been advancing telework with emphasis on the health and safety of our employees. In order to further promote telework in the future, issues such as the scope of application, attendance management rules, and personnel evaluation systems will emerge. In addition, with a focus on responding to SDGs, particularly on addressing climate change, an increasing number of parties endorse TCFD. We recognize that how to hold discussions by involving management will be an issue for the future, and we would like to hear your opinions on what kind of system should be in place and how to proceed.

Experts

OMRON announced in July 2018 that it will set sciencebased targets (SBT) for reduction of emissions of greenhouse gases, and then the issue of TCFD emerged. Because companywide supervision is necessary for TCFD, the Sustainability Office proposed to top management that TCFD should be endorsed. The linkage of financial information has been planned, but I believe that if you do not announce your efforts to tackle the issue of climate change, that will pose a problem.

Experts

Japanese companies are lagging far behind in disclosing how they manage climate change risks. Disclosure of risk information is thought to cause anxiety, but failure to disclose such information may cause more anxiety. Responding to the new coronavirus is also an important issue. I think that the overall direction is that the "weight of individuals" will increase. In society as a whole, focus will shift from organizations to individuals and the working environment will be changed to one in which employees can work more comfortably. Also, it will be necessary to fundamentally change the organization's work system and the method of reviewing positions.

Experts

As telework progressed, the situation in which women worked at home while doing housework and raising children, as well as the case in which they suffered from domestic violence, emerged as issues. I believe that companies will be asked what they can do to address these issues and to what extent they can address them in the future.

Experts

I feel that this coronavirus pandemic has shortened the time horizon for a vision we should aim for in the field of sustainability. While OMRON has begun formulating plans for the next decade, society may change at a faster pace. I think we need to address the issue with that in mind.

Experts

NTN established the Corporate Value Promotion Department two years ago. It is obvious that "Value" is important, but how about thinking about CSR as a whole with a focus on "Value" in the future? The point is to think about the value that can be provided to suppliers and the value that can be provided in response to climate change. As I told you about a post-coronavirus world earlier, "co-creation" in which we create something together will become more important than "competition," which has been given higher priority until now. I feel it is good to promote corporate activities from such a viewpoint.

5th

Date

June,2019

Participants

Experts

Katsuhiko Kokubu

Professor, Graduate School of Business Administration Kobe University

Masaru Kaizaki

General Manager of Planning Department, Sustainability Office OMRON Corporation

Hideki Matsuoka

Special Project Manager,
Asia-Pacific Human Rights Information Center
(HURIGHTS OSAKA)

Eriko Nashioka (Facilitator)

Representative Director of Institute for Environmental Management Accounting, CPA

NTN Participants

Itsuji Goto

Senior Managing Executive Officer in charge of CSR Headquarters

Hiroshi Nakano

Adviser

Kenji Nono

Manager of EHS (Environment, Health and Safety)
Integrated Management Department

Masayuki Yamazaki

Deputy Manager of EHS (Environment, Health and Safety)
Integrated Management Department

Toshiyuki Kawaguchi

Manager of Personnel Department

Kouhei Iguchi

Manager of Corporate Value Promotion Department

TOPIC 1 CSR management

Opinion

The essence of "responsibility" ("R" in CSR) is to be a company needed by society. In this sense, it is vital for a company to present its contribution to society in an easy-to-understand way to stakeholders. NTN Report 2018 describes this in the Value Creation Process section, which can be highly evaluated. In the next step, it is important to show in more detail how the company generates social value ("smooth society") as well as economic value. For this purpose, we must perceive activities in each business area cross-sectionally as a process to create value. At OMRON, TOGA (The OMRON Global Award) was started in 2012 as an initiative to further put its corporate philosophy into practice. The number of participants has grown over the years, and more than 60,000 employees joined the event in 2018. The source of this continuous development is the corporate culture where the management encourages employees to take on challenges, which leads to the gradual increase of participants who agree to the purpose of the event, which results in many employees realizing the significance of solving social challenges. This year, NTN PROUD AWARD will be held for the second time. Based on the example of OMRON which shows that continuation leads to transformation, we hope that the significance of this initiative will take a firm hold in NTN to enable the event to continue.
It is great that NTN is energetically working on initiatives to raise awareness of the corporate philosophy, such as Corporate Philosophy Dialog, distribution of NTN SPIRIT BOOK, and NTN PROUD AWARD. However, it is necessary to systematically incorporate respective measures into the annual plan for the purpose of promotion of raising awareness of the corporate philosophy.

TOPIC 2 Environment

Opinion

A company that proactively works on environmental management shows its long-term vision with target figures (e.g. zero CO₂ emissions by 2050), specifies the target by backcasting, and analyzes the concrete measures to realize the target. Through such approach, the whole group can work on the reduction of CO₂ on the basis of the common standard over the medium- and long-term. NTN therefore should also consider the adoption of such approach when setting the environmental targets.
It is good that NTN discloses how much its environmentally friendly products contribute to the environment. However, expressing the reduction of emission as "contribution" can be misleading since there still is some level of emission when seen globally as a total volume. So, regarding the method of disclosure, it might be better to mention that NTN products are helpful as a means of reducing the total volume of emission.

TOPIC 3 Human rights

Opinion

Following the global focus on ESG investment, many companies have rapidly started initiatives on "business and human rights" in the recent two or three years. Development of basic policy on human rights on the basis of corporate philosophy, rather than human rights alone, makes it easier to share the policy globally among the whole group. It is important for NTN to clarify its positioning and connection among the corporate philosophy, NTN SPIRIT, and the basic policy, in formulating the basic policy on human rights.

TOPIC 4 Governance

Opinion

We can see from the Outside Director Dialog, which is contained in NTN Report 2018, that Outside Directors'opinions are actively voiced in NTN. The recent transition to a Company with Nominating Committee, etc., which is said to have the strongest management oversight function, means that Outside Directors have a stronger voice and their opinions are more widely reflected, resulting in enhanced corporate governance.

4th

Date

June 13,2018

Participants

Experts

Katsuhiko Kokubu

Professor, Graduate School of Business Administration Kobe University

Yoko Hiyama

Lawyer admitted in Japan and New York,
Hiyama & Kubota Law Offices

Masaru Kaizaki

General Manager of Planning Department, Sustainability Office
OMRON Corporation

Eriko Nashioka (Facilitator)

Certified Public Accountant and Representative Director at Institute for Environmental Management Accounting

NTN

Hiroshi Nakano

Corporate General Manager
of CSR Headquarters

Kenji Nono

Personnel Department Manager

Takanobu Ozawa

Corporate Planning Department Manager

Kunio Kamo

Corporate General Manager of Procurement Headquarters

Masahiro Kusunose

General Affairs & Environmental Management
Department Manager

Kouhei Iguchi

Corporate Value Promotion
Department Manager

TOPIC 1 Corporate philosophy

Opinion

Creating methods of concretization such as the award system and the creation of a continuous project structure that employees voluntarily participate in, will be an important requirement for raising corporate philosophy awareness. It will be necessary for employees to think about the corporate philosophy code of conduct (NTN Spirit) and work on their own initiative to encourage actions inspired by the corporate philosophy. Continuing ongoing activities will also be effective, such as by having top management make personal visits to domestic and overseas business sites and convey the dialogs on the spirit of the corporate philosophy. In addition to organizing the NTN PROUD AWARD, we also recommend activities designed to make the corporate philosophy more relatable. For example, the results or processes of implementing NTN PROUD AWARD could be illustrated in videos shown to all employees.

TOPIC 2 Materiality

Opinion

NTN engages in a comprehensive set of CSR activities, but these activities could be improved by deciding on their materiality to indicate which way the company is heading. It is important to hold ample discussions with units such as business divisions and technical divisions in addition to head office divisions. It is also important for management to make decisions on the issues discussed. Materiality selection procedures are something the company decides on autonomously. Materiality should be determined by scoring and mapping analysis, consistently ensured to adhere to the Medium-term Management Plan. The company should ultimately consider SDGs and other issues of public concern while keeping strategic assessments of materiality in mind.

TOPIC 3 Environmental issues

Opinion

Producing environmentally friendly products is a very good thing. But quantifying the amount of CO₂ reductions of certain products may cause a risk of greenwashing^＊1 in overseas business sites, so enough care is needed when disseminating information from Japan and overseas. Even for quantification done in conformance with the SBT (Science Based Target) ^＊2 initiative, measurement accuracy and improvement levels should be prioritized instead of just releasing indicators. Scope 3 work also needs to cover approaches to improvements as well as just measurements. If possible, the ideal procedure would be to focus on key processes for CO₂ reductions, and to include disclosure of reduction effects.

• ＊1：Fraudulently making a product appear to be environmentally friendly
• ＊2：Setting targets for companies that are consistent with scientific findings

TOPIC 4 Supply chain CSR, human rights and governance

Opinion

Key suppliers should be designated and managed instead of just setting the same standards for all suppliers, and we recommend gathering a wide range of information.
Considering as global management, local areas should generally be handled by the head office, and ideally not left completely up to local business sites. It is also important to strengthen internal control functions and improve awareness among employees. Especially, in the area of human rights, human rights should be addressed on a global level even when no human rights issues exist in relation to local domestic laws. We recommend working on making human rights effective in overseas locations with different laws and cultures.

3th

Date

June 7, 2017

Participants

Experts

Katsuhiko Kokubu

Professor, Graduate School of Business Administration, Kobe University

Yoko Hiyama

Lawyer admitted in Japan and New York, Ethos Law Office, Ethos LPC

Kazuhiko Shiratori

Executive Researcher, The Japan Association for Chemical Innovation; Former Senior Manager, Sekisui Integrated Research Inc

Eriko Nashioka (Facilitator)

Certified Public Accountants / Representative Director, Institute for Environmental Management Accounting

NTNParticipants

Hiroshi Nakano

Director and Corporate General Manager, CSR Headquarters

Kouhei Iguchi

Project Leader, 100th Anniversary Planning &
Promotion Project

Yasuyuki Kuroda

General Manager, CSR Department, CSR Headquarters

Toshiyuki Matsutani

General Manager, General Affairs & Environmental Management Department

TOPIC 1 On the Centenary of the Company's Founding

Stakeholder

I feel that it is wonderful how you have sincerely responded to the results of the dialog during the past two years through evaluation and execution. Also, in the lead-up to commemorating your centennial in 2018, you are instilling your corporate philosophy. To achieve this, it is necessary to be linked to specific actions and to clarify what links the corporate philosophy to the concrete actions of employees. Doing this will enable each and every employee to contribute to society through his or her actions.

NTN

Our corporate philosophy reflects the "frontier spirit" and "co existence and co-prosperity spirit" that permeated our company when it was established, as expressed in the phrase, "creation of original technologies" and "contributing to society." In order to ensure this corporate philosophy permeates the company for the next 100 years, it is necessary to explain it in a manner that enables employees to understand the link between their day-to-day work and our corporate philosophy.
Ultimately, it would be ideal if our corporate philosophy were to guide our employees in their decision-making. We will work to ensure that each and every employee can contribute to society while meeting the needs of our customers.

TOPIC 2 The Need for CSR in the Midst of Global Expansion

Stakeholder

In order to promote CSR on a global basis, it is important to cooperate with local companies and with society. Toward that end, it is also useful to "identify materiality (issue of particular importance among wide range of CSR initiatives)" in addition to instilling the corporate philosophy, so please consider that aspect. From a management perspective, "promoting diversity" is also an important factor. For the global expansion, promoting diversity is required with the understanding of executive officers.

NTN

We have been considering the materiality of our group by placing our focus on the Sustainable Development Goals (SDGs) adopted by the United Nations. This will enable each base outside Japan to be rooted in its own region through its business operations. Regarding diversity, we have been implementing a variety of measures, including training of executive officers, and we will take steps to create an environment of mutual respect with each of our bases outside Japan and with our respective cultures.

TOPIC 3 Environmental Initiatives

Stakeholder

I believe that you have positioned itself at a fairly high level in terms of reducing the environmental impact of its business operations. In the future, I would expect to see initiatives involving different aspects than in the past through the establishment of an environmental strategy with a long-term perspective. This could involve reducing the environmental impacts and other innovations in the scope of supply chain. In such a case, it would be necessary to develop indicators, such as the environmental contribution, that could be understood by a third-party, what it means the objectivity of data. I believe that products that contribute to society ‐ not only from your own company but also developed in collaboration with other companies ‐ will be essential for the sustainable society.

NTN

From now on, we would like to concentrate not only on environmental efforts at our factories but also on creating environmental value. We recognize that the objectivity of data is also important, and we are promoting visualization of environment-related figures as non-financial indicators, such as third-party evaluations of CO₂ data. Regarding products that contribute to the environment, we are beginning to formulate such criteria, and we intend to develop products that would be effective over the medium and long terms.

(The above is the summary of the experts'comments.)

2th

Date

June 9,2016

Participants

Experts

Katsuhiko Kokubu

Professor, Graduate School of Business Administration Kobe University

Yoko Hiyama

Lawyer admitted in Japan and New York, Ethos Law Office, Ethos LPC

Kazuhiko Shiratori

Senior Manager, Sekisui Integrated Research Inc.

Eriko Nashioka (Facilitator)

Certified Public Accountants / Representative Director, Institute for Environmental Management Accounting

NTN

Hiroshi Nakano

Director and Corporate General Manager, CSR Headquarters

Toshiyuki Matsutani

General Manager, General Affairs & Environmental Management Department

Yasuyuki Kuroda

General Manager, CSR Department, CSR Headquarters

TOPIC 1 CSR at NTN

Opinion in
2015

• Further coordination between business activities and CSR activities will be important in the future.
• It is vital to include "Value Creation" as part of corporate activities for the further CSR development.

Progress

• In addition to energy conservation and global environmental protection in main businesses, we are coordinating business activities with natural energy utilization and contributions to local communities even in the natural energy business and other new business fields.
• As a way of "value creation" through products, with consideration for the global environment, local communities, personnel and other factors, we are incorporating CSR activities in our business activities from the perspective of achieving a sustainable society.

Opinion in
2016

• Taking CSR priority level and direction as CSR materiality indices, it is desirable to disclose related progress using nonfinancial KPI. Materiality should reflect changing conditions and may be adjusted every three years.
• CSR targets (as well as business targets) should not be just action plans. Maintaining them as benchmarks is also important during times of low growth.
• As a form of value creation, it is important to assess materiality in the medium and long term based on major objectives.
• Advancing local production for local consumption is necessary for energy as a whole in Japan. Businesses that contribute to this area are admirable.
• Reporting should clearly communicate the key points of this year (not across the board).

TOPIC 2 Global

Opinion in
2015

• Building up a global network is needed for the mutual interaction within the NTN Group.

Progress

We hold Global Management Conferences and CSR Global Meeting in English, and we advance the sharing of information by localizing various databases into English and publishing "e-Talk21" in-house electronic news (combined English and Japanese editions) and the seasonal "Blue Horizon" in-house bulletin (combined English and Japanese). We also engage in mutual personnel exchanges, through overseas trainee and International Internship Program systems, as well as by receiving trainees from overseas factories.

Opinion in
2016

• The CSR Global Meeting is useful for sharing the issues of each area as they are different in every region.
• "For New Technology Network" is important for expanding networking ties.

TOPIC 3 Compliance

Opinion in
2015

• Sharing information with transparency is crucial.

Progress

We established Internal Control Sections in the Overseas Offices of the General Manager in every region. As we strengthen the compliance promotion structures of the NTN Group Overseas, we are advancing measures for each region based on their conditions and characteristics. For these measures, we are conducting overall management in the head office and monitoring them in the Internal Auditing Department.

Opinion in
2016

• The corporate governance code is being handled correctly. It is originally a medium and long term way of thinking, stating that it is for all stakeholders. Showing medium and long term value creation is important.
• There might be some cases that the compliance systems do not work properly. Distance between workplaces and management may result in a failure of compliance. Communication and feedback processes are important to keep encouragement from becoming pressure.

TOPIC 4 Environment

Opinion in
2015

• We would like to see more information on environmentally friendly products designed as "value creation."

Progress

We are advancing businesses in fields that are "value creation" domains, including natural energy, EV business for the electrification and safety revolution of automobiles, robots that work and live with people, and service and solution businesses that utilize big data. In the natural energy field, we established Green Power Park as an energy recycling model. This empirical experiment utilizes power generated by vertical axis wind turbines and micro hydro turbines, to charge electric vehicles, to illuminate vegetable farms and for other purposes.

Opinion in
2016

• Green Power Park is a good effort that strengthens public infrastructure not only for the company but for the community. It also represent a significant contribution to society.
• Bearings themselves, as the core business, probably still have considerable potential. We believe there would be more added value in rotation and movement of bearings in terms of ease of turning and stopping, etc. We expect them to have new functions as well.

TOPIC 5 100th Anniversary and Future Issues

Opinion in
2016

• Approaching your 100th anniversary, we want you to devise new ways to show "value creation." The corporate philosophy is a place to return as the company continues to thrive. We hope that you approach the 100th anniversary in a way that makes employees feel proud.
• Investigating, for example, the CSR consciousness of employees in areas other than compliance on a global scale could be valuable. Investigation is necessary to confirm the permeation of the philosophy.

1th

Date

May 22, 2015

Participants

Experts

Katsuhiko Kokubu

Graduate School of Business Administration, Dean and Professor, Kobe University

Yoko Hiyama

Lawyer admitted in Japan and New York, Ethos Law Office, Ethos LPC

Kazuhiko Shiratori

Senior Manager, Sekisui Integrated Research Inc.

Eriko Nashioka (Facilitator)

Certified Public Accountants / Representative Director, Institute for Environmental Management Accounting

NTN

Hiroshi Nakano

Director and Corporate General Manager, CSR Headquarters

Toshiyuki Matsutani

General Manager, General Affairs & Environmental Management Department

Yasuyuki Kuroda

General Manager, CSR Department, CSR Headquarters

Outline of Dialog

• NTN's CSR report contains a lot of information for a B to B company (Business to Business, companies selling products and services to other companies, instead of general consumers). Further coordination between business activities and CSR activities will be important in the future.
• After a system has been built, promoting CSR activities is tend to be difficult to become part of routine procedures. It is vital to include "Value Creation" as part of corporate activities for the further development.
• For globalization, it is vital that employees around the world are aware of NTN's overall image and significance of CSR. Building up a global network is needed for the mutual interaction within the NTN Group. It is also important to provide a framework that allows the most suitable people for the job to work by incorporating a sense of global value with suitable positions and jobs.
• Companies that face problems related to compliance have issues with their corporate culture. Even companies have an appropriate system for compliance; it would be possible not to function properly. Sharing information with transparency is a key point. Some countries have different levels of compliance with laws and regulations, so it is also important to develop a framework for each country.
• Environmental efforts designed with the concept of Reduce, Reuse and Recycle are reaching their limit with regards to the Recycle aspect. The issue in the future will be focused on the Reduce aspect. We would also like to see more information on environmentally friendly products designed to "create value."

Issues that have been raised from the feedback we received will be assigned an order of priority in spans. We will continue to hold this kind of stakeholder dialog with a view to taking a pro-active stance to issues related to the environment, society, governance and other fields.